The BMF has received a letter from HM Treasury Minister, John Healey MP which confirms that there will be no immediate change from 1 January 2007 as the Government will need to take time to implement the decision taken by the European Commission. A copy of the Minister's letter is attached together with a statement issued by the BMF.

Some members have had confusing messages from their fuel suppliers suggesting that they will not be able to supply red diesel at a lower rate of duty from 1 January. That is not the case. The BMF has contacted the Federation of Petroleum Suppliers who have put out a clear message to their members and on their website www.fpsonline.co.uk

THERE WILL BE NO CHANGE TO THE CURRENT SITUATION ON 1 JANUARY 2007 AND BOATERS WILL CONTINUE TO BE ABLE TO USE LOWER RATE RED DIESEL UNTIL GOVERNMENT IMPLEMENTS THE COMMISSIONS DECISION IN THE UK.

EU REJECTS UK CALL TO SAVE RED DIESEL REBATE

On Thursday 8 December the Treasury Minister, John Healey, confirmed that the European Commission has rejected the UK Government’s application to renew the UK’s derogation on red diesel for private recreational boaters. He said that "there is no scope for overturning the decision" and that it was now "inevitable that the derogations will come to an end".

The BMF and RYA, who have been running a joint campaign to save the derogation, held an urgent meeting with senior HM Revenue and Customs officials to discuss the decision and the way forward. The meeting highlighted the deep disappointment felt by civil servants and Ministers at the decision and a solid understanding of the need for an agreed transition period to assist the industry to prepare. Following the meeting BMF Chief Executive Rob Stevens commented, "This decision is naturally very disappointing and will have an impact on the boating market and business implications for some companies in the industry."

The UK Government will now have to bring the directive within the scope of national law in a timescale that is acceptable to the Commission. When the law is finally enacted in the UK companies will not be able to sell red diesel to leisure users (the benefit to commercially operated craft will remain). This will require companies to put in the infrastructure to stock and supply ultra low sulphur diesel (ULSD) - the same diesel sold on the high street. Until the law is implemented boat users will be able to continue to use lower duty red diesel.

Although the derogation officially ends on 31 December 2006 there will be no immediate impact on the industry. The Government must consult stakeholders about the changes and assess what measures are necessary, how to enforce them and in what timeframe this will take place.

Minister Healey said that he had already made it clear to the responsible EU Commissioner that the UK will need a clear transitional period in which to implement the changes required particularly as legislation at the UK level will be required to implement the EU Directive.

On receiving the news Howard Pridding, Executive Director of the BMF said, "We welcome the Minister’s acknowledgement of the problems that will flow from this decision."

The process to implement the legislation will require an announcement in a Budget statement in Parliament followed by a Finance Act and possible secondary legislation. Prior to that there will need to be consultation with interested parties.

Industry representatives at the BMF and RYA have assured their members that they will press for the longest possible transitional arrangements so that the boating community has time to prepare. Howard Pridding added, "The BMF and RYA will continue to work closely with the UK Government to ensure that a lengthy transitional period is achieved in order for companies to be able to business plan and implement the necessary changes".

The BMF believe it is unlikely that the price of fuel will increase in 2007, and are stressing to their members to work with them through the forthcoming transitional process to ensure that the leisure marine industry can continue to prosper. Howard Pridding concluded, "We are pleased that the UK Government has recognised the work that the BMF, RYA and IWA has contributed to the campaign and found their assistance to be invaluable. We’d also like to pass on our thanks to our members for their support and help so far."